Harley to reduce shipments in 2014 to increase demand

MILWAUKEE, Wis. -- Problems with the foreign supply chain for the new Street motorcycles led to flat sales in the second quarter for Harley-Davidson, the company announced Tuesday.

The Motor Co. will drop the number of units shipped in 2014 to maintain demand, executives said during a conference call.

The company was originally projected to ship 279,000 to 284,000 units this year but instead will ship between 270,000 and 275,000 units – still an increase of 3.5 to 5.5 percent over 2013, said CEO Keith Wandell. Harley shipped 92,217 units in the second quarter, an increase year-over-year of 9 percent, but on the low end of planned range of 92,000 to 97,000.

“Given where we are in the U.S. selling season, we don’t think we’ll get back on track for our forecasts,” Wandell said. “Protecting our premium brand is our utmost importance and we will continue to adjust supply.”

Motorcycle revenue was was up 11.5 percent year over year for the quarter, to $2 billion, with net income increasing 30.3 percent to $354.2 million. Revenue per unit increased to $991, and sales are up 1.1 percent in the United States and 4.2 percent internationally year to date.

The company said it lost market share in the United States due to soft Sportster sales and the absence of Road Glide models. Sales declined in Japan and Canada but were balanced by growth rates that were reportedly ahead of plan in India and southern Europe.

Harley-Davidson added five new dealers outside the United States during second quarter, and has added 125 dealers since 2009, in keeping with the company’s goal to add between 100 and 150 dealers internationally from 2009 to 2014.

“We are disappointed with Q2 retail sales, but we are pleased with our financial results,” Wandell said.

Retail inventory is up by 6,600 year-over-year in United States and approaching levels not seen since 2009, said John Olin, senior vice president and chief financial officer.